Government through the Ministry of Finance has announced that it will maintain the value added tax form as a mode of collecting revenue, dropping the earlier proposed change to sales tax.
Presenting the 2020 Budget to Parliament this afternoon, Finance Minister Bwalya Ng’andu said the decision is as a result of the countrywide stakeholders consultations that then Minister of Finance conducted.
“Mr. Speaker, in the 2019 Budget Address, Government proposed to abolish Value Added Tax and replace it with Sales Tax”
“Following the pronouncement, a number of concerns were raised by various stakeholders, which included the cascading effect, negative impact on GDP growth and job losses through elimination of intermediaries in the supply chain. As a listening Government, we decided to carry out countrywide stakeholder consultations”
The Minister says based on the outcomes of the consultations, Government has decided to maintain the Value Added Tax, but address the compliance and administrative challenges.
Dr. Ng’andu has proposed to spend K106.0 billion in 2020, representing 32.4 percent of GDP. Of this amount, K72.0 billion, representing 22.0 percent of GDP which will come from domestic revenues, while the balance will be raised through domestic and external financing.
He says the process of formulating the 2020 Budget was informed by the compelling need to continue consolidating the fiscal position whilst safeguarding the allocations on social protection and other core service delivery areas.